Tag Archives: Project Eagle

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The Public Accounts Committee is launching its report on the sale of Project Eagle.

Now.

The chair of PAC, Fianna Fail TD Seán Fleming said:

“The committee considers that it was not appropriate for Nama, as the contracting body, to meet with Cerberus representatives the day before the Project Eagle bid closing date. It could have given the perception that Cerberus was benefiting from preferential treatment.

“Also. The committee considers that it was not procedurally appropriate for the Minister for Finance [Michael Noonan] to meet with senior Cerberus representatives on the day before the Project Eagle bid closing date. This could have given the perception that Cerberus was benefiting from preferential treatment.”

Facebook live link here

Read the report here

Previously: ‘Not Appropriate’

Eagles, Vultures and Turkeys

UPDATE:

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From top: Daniel McConnell, of the Irish Examiner; Hugh O’Connell, of The Sunday Business Post, and Josepha Madigan, Fine Gael TD and member of PAC

You may recall how, on Sunday, February 12, in The Sunday Business Post, Hugh O’Connell and Jack Horgan-Jones reported on a draft working paper by the Public Accounts Committee into Nama’s sale of Project Eagle.

They reported:

The paper said it was “not appropriate” for the Department of Finance to meet with the ultimately successful bidder, Cerberus, in the days before the closing date for Project Eagle bids. It similarly states that it was “not appropriate” for Noonan or Nama to meet with Cerberus the day before the Project Eagle bid closing date – and that this could be perceived as “special treatment”.

This morning.

PAC’s report no longer states the Department of Finance and the Minister for Finance Michael Noonan’s behaviour was ‘not appropriate’. Instead, their behaviour was ‘not procedurally appropriate’.

Why was it changed?

From the press conference…

David Davin Power (RTE): “You found that Michael Noonan meeting Cerberus wasn’t ‘procedurally appropriate’ and I know there was a contention about that on the committee. Fine Gael members voting against it. But Michael Noonan says that he never had an adequate opportunity to respond to what was ultimately an adverse finding against him and that he’s been unfairly treated, effectively, by the committee.”

Sean Fleming: “Well, he said that, based on the original working document that said it was ‘inappropriate’ but the wording in the report published today refers to the procedures that allowed that meeting to happen. It was procedurally inappropriate. So it’s not quite the same as what was in the original report. And that word is there for a reason. Because this committee is precluded from finding specific fault against an individual person. And we’re looking at the process of that meeting, not specifically the person who attended. I would [inaudible] the distinction between the finding in relation to Nama, where we say it was inappropriate, because we were finding that the body, the corporate body of Nama, rather than that one person, acted inappropriately. But we can’t use that particular word due to legal restrictions, in relation to one individual.”

Davin Power: “But why did you seek to use that word if it was legally suspect in the first place…”

Fleming: “The committee never sought to seek that. There was a working document prepared after some 30,000 sheets of paper presented to the committee and after 11 public hearings. The committee never used that particular wording. The only wording that the committee settled on is the wording in the report.”

Davin Power: “Could you ask one of the Fine Gael members [of PAC] to respond to that point? Are you happy…[inaudible].”

Fleming: “Peter [Burke], if you’re happy?”

Peter Burke: “Thank you very much. First of all, I think to use the words ‘procedurally inappropriate’ is not fair. I would point out that the Minister did attend the PAC meeting, even though he’s not legally required to do so. He spent five hours under intense questioning. He brought forward all information and answers and answered everything very clear and concise and to see a situation whereby he was actually denied natural justice because the response that’s in the report is to a media leak which appeared on the Sunday Business Post. So, in other words, he never got due process or was questioned on the content of this assertion.

“And, to point out, Section 9 of the Nama Act is very clear. That it is independent in its functions in terms of its role with the minister and previous people have brought this up, including our chairman when the act was [inaudible] in the Dáil in 2009, in terms of to keep it outside of the realm of politics, I mean that was very, very important. And to suggest that it’s procedurally inappropriate, one has to ask: what is the procedure? And there is none. If the minister has clear legal separation and there is a former US secretary of the treasury coming over to Ireland to discuss, from banking to insurance to asset management, I think it would be unwise for any minister not to meet him.”

Later

Burke: “… the commercial activities of Nama are driven by the board. The minister has no role in this. And even, as a process, it was mentioned that the minister should have called off the sale, but at that time, he’d no legal power to do so. And there’s departmental legal advice, which was mentioned at the committee here, in relation to that.”

Daniel McConnell (Irish Examiner): “But are you not playing politics with it now? Are Fine Gael not playing politics with the PAC, for the first time in its history, in 94 years, you caused a vote at the PAC, purely to protect the standing of Michael Noonan?

Burke: “No, Danny, that’s not correct. If we look at this, in a fair and balanced fashion. If a minister, who is not legally obliged to attend the PAC, does so of his own free will, in the interest of fairness, in the interest of transparency, on foot of that, that he is denied the right to due process, to respond to a charge that was put to him, that he was never asked one single question on, I think that’s an incredible part of this report. That the minister was denied that right to respond to an assertion that he was never…”

McConnell: “So, who put it in the report initially then? Because this is important. Who put the initial finding of ‘inappropriate’ in the report? Was it a civil servant?”

Burke: “Here is a draft document

McConnell: “So a civil servant…

Burke: “…which was leaked to the Sunday Business Post…”

McConnell: “So it was a civil servant  who put it in, is that what you’re saying?”

Burke: “It was a draft document, I can’t answer that….”

Fleming: “I will answer that, and I will call on David Cullnane [Sinn Fein] next. I, as chairman of the Public Accounts Committee, supervised directly, personally..”

McConnell: “So it was your, that was your, that was your language?

Talk over each other

Fleming: “…reporting in the first instance. What I do want to clarify, people mightn’t have go to it. We put a specific appendix in the report, on page 86, on the issue. We record fully and faithfully everything in respect of the minister’s response. First of all, in that, when we came to that issue of whether or not, at our meeting, and it’s all documented there [inaudible] we had three or four meetings, and Peter and his [Fine Gael] colleagues proposed wording to say, rather than it was ‘not procedurally correct’, to put the wording it was ‘not advisable’. So the board members were satisfied that the report should say it was ‘not advisable’ of the minister. That was voted down and the other wording was put forward.”

“But I just want to respond, before I call on David Cullinane, it was fortuitous in a way that there was a leak because that did give the minister to respond and the content of the letter received by the minister was examined closely by the parliamentary legal office in this house. And [inaudible] essentially responded to any allegations that we were about to make. Even though his letter came in before we concluded. And I do want to say, this is the transcript, the 82-page transcript of the meeting, of the Public Accounts Committee on Thursday, the 6th of October 2016. And I have to say that that meeting, the minister and the people on his side were the only people aware in the room, at that time of the meeting with Cerberus. No member of the committee was aware that a meeting ever happened. And the minister gave no indication whatever of that meeting. To suggest we didn’t ask him something about which we knew nothing about is unusual. He had four and a half hours at the meeting when we invited him in to talk about the sale of Project Eagle. And he spent four and a half hours discussing it and made no reference to that meeting. And there is the transcript if people want to check it.”

Later

Hugh O’Connell (Sunday Business Post): “Do you think you may have dropped the ball, as a committee, in not asking him if he had met Cerberus? And secondly, when you did become aware of it, why didn’t you ask him about the meeting via correspondence?”

Fleming: “The answer to that is we didn’t drop the ball because we weren’t aware the game had happened. Right? No member of the PAC were aware, at the time, that that meeting…”

Josepha Madigan: “Sorry, that’s incorrect. It was subject to FOI, the minutes were actually given in correspondence on the 4th of November…the 8th of November [2015] to the committee, so they were fully aware of…”

O’Connell: “So, why then, did you not write to Michael Noonan and ask him: why did you have this meeting? And what was the purpose of this meeting?”

David Cullinane: “There was a note that was given to the committee under the Department of Finance that set out the official notes taken by officials, in terms of that meeting. And those notes clearly show that Project Eagle was raised and it was raised in the context of Cerberus raised and they were told that it would be best dealt with at a meeting later that day with Nama which we believe that was also inappropriate. So, there was reference to Project Eagle in that meeting. And…”

O’Connell: “Why didn’t you ask him then? Why didn’t the committee call him back in?”

Alan Farrell: “That’s entirely inaccurate…it is entirely inaccurate….you’ve got your dates mixed up, David.”

Previously: Spotlight Falls On Noonan (March 1, 2016)

31/1/2017 Mmid-term review of Capital Plan. Pictured are Minister for Finance, Michael Noonan, TD and Minister for Public Expenditure, Paschal Donohoe, TD as they arrive at the media briefing about the approach that will be taken to the mid-term review of the Capital Plan, ‘Building on Recovery: Infrastructure and Capital Investment 2016-2021’, which was published in September 2015. Photograph: Sam Boal / RollingNews.ie

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From top: Minister for Finance Michael Noonan; Tony Groves

In the financial world, there are rules – lots of them.

Many of them are arbitrary, some are helpful and then there are a handful of ones that are plain old common sense.

Tony Groves writes:

There’s a famous (or should that be infamous) episode of barbarity carried out against the Roman Empire in 88BC, known as the Asiatic Vespers.

The people of Asia Minor, fed up of Roman rules, Roman taxes and Roman hegemony, rose up violently. In just one day, the Roman population across Asia Minor was slaughtered; it’s estimated between 80,000 – 150,000 people were killed. This was a scrupulously prepared and viciously executed plan.

The fallout of which led to a series of wars that would last decades and pile countless more bodies on to the fire. Nonetheless, the Asiatic Vespers stand as a ruthless warning from history. A government (Rome was still a Republic) that has lost its legitimacy has lost its mandate to govern.

This week we’ve seen, for the first time in its history, the Public Accounts Committee have submitted findings supported by the majority and not unanimously.

This is a significant break of protocol and not just because the disagreement was over the wording about the Minister for Finance Michael Noonan and his handling (or alleged mishandling) of the Project Eagle case.

It was significant because it was part of another underlying trend at the hypocritical heart of Irish politics. A secret 11th commandment not included in the Bible; Thou shalt do as we say, but thou shalt not do as we do.

You see, we’ve been lectured for weeks, whether by Pat Kenny calling us thick, or Alan Kelly calling us populists, or Simon Coveney saying something. I can never remember what Simon says…

Anyway, apparently we have to pay water charges or we risk EU fines. We had to have austerity because we all partied. We have to have accept families in hotels because the banks’ balance sheets are still vulnerable. So on and so forth.

In the financial world, there are rules, lots of them and, contrary to popular opinion, these rules are overseen by a regulator. Many of these rules are arbitrary, some are helpful and then there are a handful of ones that are plain old common sense.

One such common sense rule relates to financial dealings with Politically Exposed Persons, or PEP’s.

In dealing with the EU Anti-Money Laundering Directive there are different criteria, based on the individual/entity and the service provided.

They roughly fall under three headings: Simplified Due Diligence, Standard Due Diligence and Enhanced Due Diligence. A voucher for a Macari’s Snack Box to the first person who correctly guesses which category politicians fall into.

Michael Noonan made a bad judgement call in meeting Cerberus the day before the sale of Project Eagle. This sale has resulted in a loss to the State in the range of €220 million. I’m not going to rake over the coals of this toxic fire sale. You can do that here and here.

I am going to point out that a Department of Finance, that is doing its job, might look into the EU Anti-Money Laundering Act. I’m going to guess that they’d discover that a meeting with the Minister for Finance is a meeting with a Politically Exposed Person.

I’d then be fairly certain that they would see this same meeting is covered under the Enhanced Due Diligence Regulations.

Finally, I’d hope they might realise that breaches (if discovered) of these regulations can be punished with sanctions and or fines. The fines can be of “up to €5 million in the case of natural persons, and fines of up to twice the amount of any profits gained or losses avoided”.

I’m a banker, so my sums aren’t great, but I reckon fines of up to twice the loss (as confirmed by the Comptroller & Auditor General) could amount to €440 million.

Do I think a Department of Finance that has it’s head buried in the sand is looking into this? Probably not.

Do I believe a Government that is busy trying to delegitimise even the wording of a mildly critical report into this debacle, is going to look for our money back? I’m not holding my breath.

It does make me think of the Asiatic Vespers and how fed up people were of hearing “Do as we say, don’t do as we do”. I’m fed up, too – are you?

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly at Trickstersworld

Rollingnews

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Minister for Finance Michael Noonan

In case you missed it.

At the weekend…

Hugh O’Connell and Jack Horgan-Jones, in the Sunday Business Post, reported:

Michael Noonan, the Department of Finance and Nama have all been heavily criticised in a damning secret report prepared for TDs investigating the sale of Project Eagle.

Nama’s controversial €1.6 billion sale of its Northern Ireland loan book three years ago is the subject of a number of damaging conclusions in a draft working paper to be discussed by TDs on the Public Accounts Committee (PAC).

It ultimately concludes that Nama’s sales strategy could be described as “flawed” and it has been “unable to demonstrate” that it got value for the Irish state.

The paper said it was “not appropriate” for the Department of Finance to meet with the ultimately successful bidder, Cerberus, in the days before the closing date for Project Eagle bids. It similarly states that it was “not appropriate” for Noonan or Nama to meet with Cerberus the day before the Project Eagle bid closing date – and that this could be perceived as “special treatment”.

The Public Accounts Committee will meet in private at 5pm tomorrow and then in public at 10am on Thursday.

Report: Noonan acted inappropriately – Nama sale flawed (Sunday Business Post)

Nama failed in corporate governance of Project Eagle, says draft PAC paper (Sunday Business Post)

Previously: Spotlight Falls On Noonan

Rollingnews

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This morning.

From 10am.

Nama’s chairman Frank Daly and Nama’s CEO Brendan McDonagh will appear before the Public Accounts Committee (PAC) to answer questions regarding the taking of notes and preparation of minutes at Nama board meetings on December 12, 2013 and January 8, 2014 – in relation to the sale of Project Eagle.

PAC’s chairman Seán Fleming previously stated:

“I find it surprising that at key meetings where the sale of Northern Ireland assets worth 1.3bn was being discussed that notes from which the minutes were to be prepared have not been retained by Nama. Put simply, this means these records have been disposed of and were destroyed. Therefore, the committee has agree to recall Nama to discuss this matter.”

Watch the proceedings live here

H/T: Namawinelake

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Patrick Long, of Lazard and Co Ltd and Mary Lou McDonald, deputy leader of Sinn Féin

This morning.

At a meeting of the Oireachtas Public Accounts Committee.

Patrick Long, of Lazard’s – Nama’s loan sales advisor on the sale of Project Eagle – is answering questions in relation to the Project Eagle sale.

From the meeting…

Watch proceedings live here

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A letter Pimco has sent to the Public Accounts Committee

This morning.

At the Public Accounts Committee (PAC).

The committee briefly discussed a letter sent to PAC by Pimco – one of the bidders for Nama’s Northern Ireland property loan portfolio until it learned of a fixer fee arrangement.

The arrangement involved a sum of £16m to be split US lawyers Brown Rudnick, Belfast law firm Tughans and Frank Cushnahan, a former member of NAMA’s Northern Ireland Advisory Committee.

On July 9, 2015, Nama chairman Frank Daly told PAC that once it (Nama) became aware of the fixer fee arrangement and Frank Cushnahan’s alleged involvement in March 2014…

“…that’s why we threw Pimco out, or sorry, got Pimco to withdraw,”

However, Pimco contests this and, in the letter above, says not only did Pimco withdraw from the sale, of its own accord, Nama attempted to convince Pimco to continue with the sale despite knowledge of the fixer fee arrangement.

From the letter:

Pimco has been disappointed that Pimco’s withdrawal from Project Eagle has been repeatedly mischaracterised by Nama. We would suggest that Nama has conflated what may or may not have ben discussed at the Nama Board level (upon which we cannot comment), and the reality of the calls that Pimco made to Nama and Pimco’s own decision to withdraw.

The reality of Pimco’s decision to withdraw was reflected more accurately by Mr [Alan] Stewart in his evidence to the committee on 25 October 2016. Pimco welcomes his confirmation that Pimco withdrew from Project Eagle, and was not at any stage asked to leave the process by Nama.

Pimco is largely in agreement with the summarised call notes appended to the report of the Comptroller and Auditor General at Appendix E of the report entitled, ‘National Asset Management Agency’s sale of Project Eagle’, dated August 2016, although certain points are clarified below.

It should be noted that the reference  to “a success fee arrangement (being) in place between Pimco and Brown Rudnick” noted in the report is inaccurate. Whilst an arrangement was proposed by Brown Rudnick, it was never agreed to by Pimco.

As descibred in the notes, following a request by Pimco for a call on 7 March 2014, Pimco Legal spoke to Nama on 10 March 2014 and informed Nama about the proposed success fee arrangement. Pimco wanted to understand whether, and ensure that, Nama was aware of Mr Cushnahan’s role and the fee arrangement that had been proposed to Pimco. Pimco states that it would not proceed unless and until it was clear to Pimco that Nama was aware of Mr Cushnahan’s role in Project Eagle (including his potential interest as a beneficiary of a free arrangement as had been proposed to Pimco). Pimco described details of the fee that had been proposed and the reasons for its concerns.

The Nama attendees confirmed that they were not aware of the proposal but enquired as to wether Pimco would proceed in Project Eagle should Mr Cushnahan’s involvement, or the fee proposal to Pimco, be an issue for Nama. Pimco confirmed that it was not currently proceeding with the transaction and that any decision to proceed or not would be informed by Nama’s response. Nama agreed to consider the matter further and revert to Pimco.”

We can confirm that in no way did Pimco seek the acquiescence of Nama to any fee arrangement, nor seek Nama’s agreement that any fee arrangement was appropriate. That is also clear from Nama’s own minutes of the calls and the evidence of Mr Stewart to the PAC, who confirmed that did not happen.

As the notes outline, Nama contacted Pimco the following day (11 March 2014) to advise that the Nama Board considered the involvement of Mr Cushnahan to be a very serious issue for Nama. Pimco agreed to revert to Nama and on a futher call, later that afternoon, Pimco informed Nama of its disappointment that disclosures had not been made by the relevant parties to Nama. Pimco informed Nama that it did not want to be part of any process where there was any suggestion of impropriety and was willing to withdraw.

While it is for Nama to explain the reasons for the questions asked of Pimco on the call (and we note Mr Stewart sought to address this topic in his evidence to the committee) Pimco can confirm that on that call we were asked by Nama if we had considered “other options”, such as proceeding without the three parties, and we were asked to consider, before closing any doors, whether every option was being considered. Pimco agreed to give the matter final consideration and to revert again.

On 12 March, Pimco advised Nama that it had not option but to withdraw form Project Eagle. Nama expressed its disappointment but accepted the decision.

Pimco confirmed its decision to withdraw in writing on 13 March 2014.

In the last hour, chairman of PAC Sean Fleming said the letter would be sent to Nama “within 24 hours, asking for a paragraph-by-paragraph response, confirmation or disagreement, paragraph-by-paragraph.”

Comptroller and Auditor General (C&AG) Séamus McCarthy is now fielding questions from the committee.

Watch today’s PAC proceedings live here

Related: John McGuinness: Nama may have misled PAC (Sunday Business Post)

Pimco denies it was forced out of Project Eagle by Nama (Irish Examiner)

Pics: Jack Horgan-Jones and Hugh O’Connell

UPDATE:

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John Collison, deputy head of asset recovery at Nama at time of Project Eagle sale

Today.

Nama officials are appearing before the Public Accounts Committee to discuss the sale of Project Eagle in light of the Comptroller and Auditor General’s report into the sale.

Those appearing include John Collison, deputy head of asset recovery at Nama at the time of the sale; Michael Moriarty, now the current head of asset recover at Nama; Alan Stewart, senior divisional solicitor; and Donal Rooney, former chief financial officer at Nama.

Meanwhile…

*popcorn*

Today’s proceedings can be watched live here

Previously: 

Nama’s Project Eagle Anomaly

‘You Give Limited Information To Get The Answer That You Want’

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From top: Independent TD Catherine Connolly;  Nama board members Oliver Ellingham, Willie Soffe and Brian McEnery, at a meeting of the Public Accounts Committee today

This afternoon.

The Oireachtas Public Accounts Committee is continuing to question Nama officials in relation to the sale of Project Eagle.

The three members of Nama before the PAC today are non executive director at NAMA Oliver Ellingham, and Nama board members Willie Soffe and Brian McEnery.

Mr Soffe is also chair of Nama’s credit committee while Mr Ellingham is chair of Nama’s risk management committee.

Mr McEnery is chair of Nama’s audit committee and a former member of Nama’s Northern Ireland Advisory Committee (NIAC) – alongside Frank Cushnahan who was heard receiving £40,000, in bundles of two, from a Nama client during a secret recording broadcast on a BBC Northern Ireland Spotlight programme last month.

Readers may recall how, on Friday, a former member of Nama’s NIAC Brian Rowntree went before the Public Accounts Committee and spoke of the NIAC seeing a University of Ulster study which contained both commercially sensitive and confidential information in relation to Nama.

Mr Rowntree said:

“This refers to a piece of work, an evidence based piece of work undertaken by a university who were doing land assembly analysis and before they’d even undertake or engage with NAMA they had whole stage of caveats around the confidentiality of the information and this was explained to the committee, now if that’s not commercially sensitive, I don’t know what is. This data not only had the location and types of property, this data also had details of planning permissions, current, and about to expire and potential for renewal. it also had details of housing and residential need overlaying on top of it,  it also had details in consolidated form of holdings by other banks. So one would have a got a picture of the complete land bank of Northern Ireland, and one one have looked at the opportunity locations within that portfolio.

“…The information was provided to the university by NAMA, so it was shown as NAMA properties and there was a separate section of the report which was privileged to NAMA which showed the NAMA impact analysis across all those platforms..”

Further to this, earlier today Independent Catherine Connolly asked Mr Soffe if he disagreed with Mr Rowntree’s claims.

In addition, Ms Connolly questioned Nama’s decision not to tell Lazard – which was hired to oversee the sale of Project Eagle – about the ‘fixer fee’ arrangement whereby 15million pounds was to be divided between law firm Brown Rudnick, Belfast solicitors Tughans and Frank Cushnahan if Pimco successfully bought the Northern Ireland loan book.

After Pimco’s withdrawal from the sale – following the fixer fee arrangement becoming known – Cerberus bought the loan book as Brown Rudnick and Tughans continued to be involved in the sale.

Catherine Connolly: “In relation to the [University of] Ulster research. And Mr Rowntree was very clear about that: that it was a high-level piece of research and you’ve confirmed that to day and there were many presentations and he said that was potentially confidential information that somebody could make use of. To summarise him, that’s what he said. You probably listened carefully to his evidence so you know better than I did. So, are you disagreeing with him on that?”

Soffe: “Well, to explain, I mean the information in relation to planning zoning is available in planning offices all over…”

Connolly: “I understand that, I’ve been 17 years in local authority, I head you say that: I’m asking you a question…”

Talk over each other

Connolly: “No my question is: are you disagreeing with Mr Rowntree? That’s simply my question.”

Soffe: “I am…I, I…”

Connolly: “Good…that’s okay..”

Soffe: “I don’t see …  there was nothing… anything particularly confidential about it that was of benefit. The same information could be found by anyone who wanted to inquire about developmental… was possible…”

Connolly: “That’s okay…”

Soffe: “On particular occasions…”

Connolly: “That’s okay. In relation to Lazard and Lazard was appointed in January 2014 and Lazard were given a verbal briefing to the sales process, isn’t that right? There was no written document? It was a verbal briefing? And..is that correct?”

Soffe: “Yeah, well we were..they were to come back with..”

Talk over each other

Connolly: “You didn’t give them a written document. You gave them a verbal briefing. Okay. And then the Comptroller and Auditor General has raised concerns in relation to what you relied on – the assurance from Lazard and today, you’ve relied on that again and Mr Soffe, in particular, you’ve come back and you’ve said that Lazard reassured you that the process was….”

Soffe: “Competitive tension to the very end.”

Connolly: “Okay. Now, you never told Lazard that Pimco had withdrawn in the circumstances that they had withdrawn.”

Soffe: “It was not relevant for them. They were gone out of the process and like, you know, there was no reason to discuss the, to discuss it with them. Pimco wanted to go away quietly and they were allowed to do that.

Connolly: “Well, they certainly didn’t go away quietly because we’re talking about it now in 2016.”

Later

Soffe: [Lazard] gave us an absolute assurance that there was potential, tension to the end, competitive tension right to the very end and that we were achieving more than our minimum price.”

Connolly: “You’re not listening to my question, sorry now. The Comptroller and Auditor General has raised an issue in relation to the nature of the assurance given by Lazard. And he says that Lazard had only limited information. So he raises a concern about that assurance. Do you accept that concern?”

Oliver Ellingham: “I think if we were to phrase that, we were happy that the assurance we had from Lazard, for a commercial transaction, was adequate.”

Connolly: “Well…I…”

Ellingham: “As a board, we were faced with, we’re selling some assets and I’m sure any party would be able to find reasons why an advisor needed to be given lots more information to give us an opinion. What we were asking for, was an opinion from Lazard as to whether we were selling in a competitive process and getting fair price.”

Connolly: “How could you possibly rely on an assurance where you’ve given limited information.  Where you know that Pimco have withdrawn? Sorry now, and then you come back and you even  today tell us that you’re reassured by that assurance?”

Ellingham:What we were trying to do was to sell some assets for a particular sum of money….

Connolly: “Yes.”

Ellingham: “...in order to pay down debt. And therefore, we had an assurance that provided we got over 1.3million [sic] then that was the right price in the marketplace and the buyer was capable of buying it. We were not, for us, it was a commercial transaction and for Lazard to opine on the mass of the situation, that’s not, we didn’t think it was relevant for them to be told why Pimco had withdrawn.”

Connolly: “Well, certainly, to me, I’m no expert and I’d say to the ordinary person watching or listening, I don’t think…I’m not reassured. You give limited information to get the answer that you want. You gave limited information to get precisely the answer you want, which is reassurance that the competition is competitive when there’s only one remaining bidder.

Soffe:Well, there were two to the end and as we have said, that is not uncommon. Even if you look at, processes, like Project Eagle, there were two at the very end and that’s quite normal…”

Connolly: “It could well be but this is not a normal process, this is not a normal situation. You’re now aware that there were success fees. You’re fully aware of all that and you still don’t pass on that information to Lazard.”

Soffe:That was dealt with and out of the way and it had nothing to do with the remaining process.”

Watch live here

Last Friday: Nama’s Project Eagle Anomaly

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Minister for Finance, Mr. Michael Noonan disputing the C&AG Special Report into the National Asset Management Agency’s sale of Project Eagle.

Watch here.

Project Eagle?

Meanwhile…

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Nama’s chief executive Brendan McDonagh and a letter from Michael George, managing director of Fortress Capital, to Andrew McDowell, Taoiseach Enda Kenny’s former economic adviser, at 3.04pm on February 13, 2014

Further to the appearance of Nama officials – including chairman Frank Daly, chief executive Brendan McDonagh and audit committee chair and member of Nama’s Northern Ireland Advisory Committee Brian McInery – before the Public Accounts Committee yesterday…

US investment fund Fortress was the only underbidder in Nama’s eventual sale of Northern Ireland loan portfolio, otherwise known as Project Eagle, to Cerberus.

You mayrecall the following sequence of events, as outlined in the Comptroller and Auditor General’s report on the sale:

Nama approved a proposal to sell Project Eagle at a minimum price of £1.3bn over two meetings on December 12, 2013 and January 8, 2014.

On January 8, 2014, Lazard and Company Ltd were appointed as the loan sale advisor for Project Eagle.

On February 13, 2014, it was reported in the press that Pimco had approached Nama, back in 2013, to buy the whole Northern Ireland portfolio and, a day later, selected bidders were allowed to access information on the loans in a data room.

On March 12, 2014, Pimco withdrew from the loan sale process – after informing Nama of a  £15million success fee arrangement involving a member of Nama’s Northern Ireland Advisory Committee, Frank Cushnahan, London law firm Brown Rudnick and Belfast-based Tughans solicitors.

On April 3, 2014, Nama approved the sale of Project Eagle to Cerberus who also used the services of Brown Rudnick and Tughans solicitors.

You may also recall reports that Fortresss had to make a representation to the Department of the Taoiseach on February 13, 2014, before it was invited into the bidding process some five weeks after it had begun and Nama’s denial of the same.

During yesterday’s PAC meeting, Fine Gael TD Noel Rock had the following exchange with Brendan McDonagh.

Noel Rock: “When were Pimco initially informed there was going to be a sales competition?”

Brendan McDonagh: “Pimco were told, I think, post the board meeting in January 2014. We’ve always maintained to Pimco, that there was never going to be an exclusive off-market sale directly to them.”

Rock: “Okay. All right. Do we have the minutes for that board meeting?”

McDonagh: “Yes.”

Rock: “And it says that in it? Okay. Fortress, it was said earlier on, I don’t know if it was yourself of Frank said it, that there was no email to Enda Kenny from Fortress seeking…”

McDonagh:None. No. There was reporting effectively that Fortress had, it was reported in the media that Fortress had to email the Department of the Taoiseach, the official Department of the Taoiseach to get access to the thing. That’s actually completely untrue. I know the managing director, senior managing director of Fortress. I met him a number of times I think in 2009 and we stayed in touch over various things. He emailed me on the 13th of February 2014. My email is available to the, there’s nothing in it. Basically saying, ‘Brendan, how’s it going?’ Talked about the rugby match at the weekend and said, ‘I just heard through one of my colleagues that the Northern Ireland portfolio may be on the market, it’s something I’d be interested in’. I forwarded the email to my colleague and said, ‘please let this guy, get Lazards to contact him because, you know, I met this guy, and I had no issue with him. I would know Fortress in my previous life. And it was, Fortress were brought, they were contacted by Lazards, I think that evening on the 13th of February. They were sent an NDA,  an non-disclosure agreement and they were sent the NDA on the 14th of February and then they didn’t return their signed NDA, because you can’t get access to the data room until you supply the NDA, they didn’t return their signed NDA until the 26th of February, I don’t know why it took them 12 days to sign it. Maybe they had to go through their own internal compliance or whatever it was but they were invited into the process, on the evening of the 13th of February, but certainly on the 14th of February when they were sent the NDA.”

Rock: “I’m familiar with your emails. I’ve seen a copy of those. On the same day though, they did email the Department of the Taoiseach. Why do you think they would have done?”

McDonagh: “There was no, I don’t know what email the Department of the Taoiseach, I haven’t actually personally seen that email…”

Rock: “I’ll forward it to the secretary so you can be provided with a copy.”

McDonagh: “But I saw the media report but I was a bit surprised by that because I had got an email from the senior managing director of Fortress on the 13th of February myself and I arranged for Lazards to get in contact.”

Rock: “Okay, all right. Thank you. In, I think it was yourself Brendan, in a previous appearance before the PAC, I’m just going to quote this here if you don’t mind: ‘We appointed Lazard, then Lazard approached the nine biggest funds in the world, the guys who would have fire power and capital to be able to buy a portfolio like this. Then you listed the nine firms, including Fortress that you said had been approached. But it obviously seems, based on the discussion of the email with the Department of Taoiseach and indeed to yourself, that it wasn’t the case that they were approached; they, in fact, had to approach you. Do you accept this quote is now inaccurate, in effect?”

McDonagh: “No, I don’t think so. I don’t think that’s inaccurate, deputy, because Fortress were one of the people which were considered to be approached by Lazard anyway so, as I said, there’s a league table in terms of, you know, people, division one, division two, division three, so as people drop out, we were pushing Lazard to get more people into the process.”

Rock: “Right. So. So, like, I’m finding this hard to understand. Did Lazard approach Fortress? Or not? If so, why did they [Fortress] need to approach you?

McDonagh: “Well, all I can say to you, deputy, is as follows: On the 13th of February, I got an email from the senior managing director of Fortress, I got one of my colleagues to contact Lazard to say, ‘contact these guys in Fortress, find out if they’re interested or interested or not’. I don’t know personally when Lazard were going to contact Fortress or not, but I do know what happened on the 13th and 14th of February.”

Rock: “Okay.”

Letter via Mick Wallace

Related: Fortress had to apply for ‘late’ Nama sale bid (Mark Tighe, Sunday Times)